MercoPress. South Atlantic News Agency

The inflation data no one understands: Argentina's 8.5%

Argentina released the latest data on the consumer prices index which according to the controversial Nacional Statistics and Census Office, Indec, was 0.9% in December totaling 8.5% for the whole twelve months.

The CPI for Buenos Aires City and the metropolitan area shows that prices in 2007 rose less than in 2006 (9.8%), which according to official statements means that inflation in Argentina is receding. However the 8.5% figure is far distant from private estimates who agree that inflation in 2007 was in the range of 17% (optimists) and 22% (the more pessimistic). Indec has been in the eye of the storm for months with the Kirchner administration having sacked several technical staff members for not "correctly" interpreting cost of living data, and replaced them by more docile personnel, and not necessarily statistic experts but rather "phone extensions", as defined by the Buenos Aires press. The Indec conflict persisted with labor stoppages, interventions, threats and a general discredit of the Argentine official statistics office. Actually the Kirchner administration was and is concerned that a two digits inflation will have a significant impact on sovereign bonds with floating interest rates adjusted by economic growth and inflation. Furthermore one of the regional Indec offices, in Mendoza province, which apparently was doing its job correctly, for the last six months systematically calculated inflation as two and three times higher than the official index, elaborated in the main office in Buenos Aires. But less than a month ago when Mrs. Kirchner took office, one of the first moves of the economic team of her administration was to change all the staff at the Mendoza Indec office, which surprisingly is now aligned with Buenos Aires data. Anyhow the December index shows that compared to November, health and medical attention jumped 3.5%; leisure, 2.4%; other goods and services, 1.9%; clothing, 0.9%; housing and basic services, 0.8%; transport and communications, 0.7%; food and beverage, 0.4% and education, 0.2%. On the other hand home maintenance and equipment actually decreased 1.5%. Wholesale prices in December increased 0.5% over November totaling 14.4% in the last twelve months and the construction index was up 0.7% in December. Investors, bankers and multilateral organizations have warned Argentina that one of the first tasks of the incoming administration if it wishes to have access to credit markets is to ensure the transparency and independence of the statistics office.